HONG KONG - The city’s slumping economy - hit by the double whammy of domestic unrest and a trade war between the United States and China - has forced the Hong Kong government to announce a fourth round of relief measures is on the cards.
Without giving details, Chief Executive Carrie Lam on Tuesday (Dec 3) said the government is looking to provide “targeted” help to businesses or industries that face difficulties, in order to “support businesses, protect jobs and livelihoods”.
The new move comes after three rounds of relief measures rolled out in August, September and October.
The financial secretary will announce specifics of the fourth round of initiatives shortly, said the city’s top official.
Previous measures amounting to over HK$21 billion (S$3.7 billion) included a raft of new policies such as more relaxed mortgage rules, compulsory land purchases for housing and increased subsidies for low-income families. They also included fuel subsidies for commercial vehicles, cash incentives for tour operators and various waivers on government fees for companies, particularly small and medium-sized enterprises (SMEs).
Mrs Lam expected the current low unemployment rate of 3.1 per cent to rise as more businesses are affected.
Data released on Monday showed that retail sales fell by a record 24.3 per cent in October - a period which usually sees more mainland visitors to Hong Kong and sales spike due to the “Golden Week” Chinese holiday - making it the fourth consecutive month of double-digit declines.
Separately, on Monday, Financial Secretary Paul Chan painted a grim outlook for the city, cautioning that Hong Kong was expected to record its first budget deficit in 15 years and that output growth in the economy could contract by 2 percentage points.
The deficit would be driven by an adverse economic environment, lower tax revenue and income from land sales , as well as the cost of recent economic sweeteners, said Mr Chan.
He said the forecast was for the economy to contract by 1.3 per cent in 2019.
Some experts though remain critical of the relief measures. Economics professor Terence Chong from the Chinese University of Hong Kong (CUHK), for instance, has criticised the lack of focus, likening the previous government measures to “giving out money randomly”.
“The unrest has hit sectors differently with some hit but others like the bus companies benefiting from the shutdown of the MTR."
“You have to make sure that the sector that you’re helping is in need. You give money to restaurants but not every restaurant needs help or are in protest areas,” said Dr Chong.
He also said that if the government targeted aid at those who truly needed it instead of across the board, “the money involved will not be that much”.
Asked if the city’s economy, which has already tipped into a recession, could recover, Dr Chong replied: “Basically it’s a local problem. If the unrest ends, we can recover quickly. If the unemployment rate is at 3.5 per cent, house prices will not collapse, everyone still has a job and won’t feel any difficulty.”
Speaking before the weekly meeting of the Executive Council or Cabinet, Mrs Lam on Tuesday also touched on the Hong Kong Human Rights and Democracy Act signed into law by US President Donald Trump last week, in a show of Washington’s support for the protesters in Hong Kong who are demanding greater freedom from Beijing.
The legislation calls for an annual review of the special trading status Hong Kong enjoys with the United States and allows for sanctions against those found violating human rights in the territory.
Mrs Lam described the US legislation as clearly an interference in the city’s affairs and said it created an uncertain business climate that undermined investor confidence, including the 1,300 American companies in the city.
In late September, the American Chamber of Commerce (AmCham) signalled its support for “the motivations and objectives” of the new Bill but stressed its reservations about some provisions including on economic sanctions and visa bans. AmCham said they “could have unintended, counter-productive consequences, including on American business”.
On Monday, China retaliated against Mr Trump’s move by suspending US warship visits to Hong Kong and imposing sanctions on some non-government US organisations in the city. Mrs Lam on Tuesday said her government would cooperate with China’s Foreign Affairs Ministry on the moves.